Micro Economics AP - Unit 2 - Price, Quantity and Efficiency

Micro Economics AP

Unit 2 - Price, Quantity and Efficiency

Unit II. Price, Quantity and Efficiency

Days ( 3 weeks)

Chapter 3 Learning Objectives

Characterize and give examples of markets
Describe demand and explain how it can change
Describe supply and explain how it can change
Relate how supply and demand interact to determine market equilibrium
Explain how changes in supply and demand affect equilibrium prices and quantities
Identify what government-set prices are and how they can cause product surpluses and shortages

Chapter 4 learning objectives

Differentiate between demand-side market failures and supply-side market failures
Explain the origin of both consumer surplus and producer surplus and explain how properly functioning markets maximize their sum, total surplus, while optimally allocating resources.
Describe free-riding and public goods and illustrate why private firms cannot normally produce public goods.
Explain how positive and negative externalities cause under-and overallocations of resources
Show why we normally won’t want to pay what it would cost to eliminate every last bit of a negative externality such as air pollution.

Chapter 5 Learning Objectives

Describe how the government’s power to coerce can be economically beneficial and list some of the difficulties associated with managing and directing the government
Discuss “government failure” and why it happens

Chapter 3 Vocabulary

Demand

Demand Schedule

Law of Demand

Diminishing marginal utility

Income effect

Substitution effect

Demand curve

Determinants of Demand

Normal goods

Inferior goods

Substitute goods

Complementary goods

Change in demand

Change in quantity demanded

Supply

Supply schedule

Law of Supply

Supply Curve

Determinants of Supply

Change in Supply

Change in Quantity Supplied

Equilibrium Price

Equilibrium Quantity

Surplus

Shortage

Productive efficiency

Allocative efficiency

Price ceiling

Price Floor

Chapter 4 Vocabulary

market failures

demand-side market failures

supply-side market failures

consumer surplus

producer surplus

efficiency losses or deadweight losses

private goods

rivalry

excludability

public goods

nonrivalry

nonexcludability

free-rider problem

cost-benefit analysis

marginal cost-marginal benefit

quasi-public goods

externality

Coase theorem

Pigovian tax

optimal reduction of an externality

Chapter 5 vocabulary

government failure

principal-agent problem

special-interest effect

collective-action problem

earmarks

rent seeking

unfunded liability

budget deficit

debt crisis

fiscal policy

monetary policy

regulatory capture

deregulation

loan guarantees

Textbook Reading Sections

McConnell/Brue Chapter 3 Demand, Supply and Market Equilibrium p. 46--69

McConnell/Brue Chapter 4 Market Failures: Public Goods and Externalities p. 76-101

McConnell/.Brue Chapter 5 Government's Role and Government Failure - 102-115

Graphing and Data Analysis Assignments

McConnell/Brue Focus Review Guide Chapter 3 p. 13-33

McConnell/Brue Focus Review Guide Chapter 4 p. 34-44

McConnell/Brue Focus Review Guide Chapter 5 p. 45

Supplemental Assignments

Reasons for Change in Demand – Price of Beef

Demand and Supply Graphing Practice

Practice Problems on Supply and Demand

Practice Problems on Demand and Supply

Even More Practice Problems on Supply and Demand

Price Floors and Ceilings

Increased Tuition Subsidies Increase The Price of College Tuition article – Forbes magazine

Unit Notes

Summative Assessments

Chapter Quizzes

Multiple Choice Exam with FRQ

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